There's a feeling the bond market wants to extend the selloff from last week but it hasn't gotten the nod just yet
After having threatened to take action with PEPP and offering some strong remarks in recent days, the earlier report on the ECB suggests that such efforts are where they will draw the line when it comes to dealing with recent developments in the bond market.
Verbal intervention is one that we are already seeing and as much as they talk up tapping into the PEPP envelope, there hasn't been any concrete evidence that they are willing to take up such an approach in dealing with higher yields as of yet.
The latter also just means that the threshold just hasn't been met as of now.
10-year Treasury yields are up 5 bps today to 1.44% and threatening the highs for the week closer to 1.45%. That seems to be the threshold where bond sellers are stopping in the past few days as the market waits on firmer cues from central banks.
The ECB may have just given a conditional green light but there is more Fedspeak coming up today and the big one is still Fed chair Powell's speech on Thursday.
As much as there is a feeling that the selloff wants to accelerate again, there may not be a clear green light until we approach the latter stages of the week. I reckon a lot will ride on what Powell will say (or what he doesn't say) tomorrow.
